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Although there's nothing new in this story from Bloomberg Business Week called "Law Firms Paying the Price," it does a nice job summarizing how the economic conditions of the past 40 years have led to a huge increase in the number of lawyers per capita in this country. We're now in the midst of the inevitable market correction that occurs when supply far exceeds demand except this time it's lawyers, not widgets, that no one wants.

In the 1960s and 1970s, increased regulatory complexity and corporate consolidation spurred growth in the size of corporate law firms and the fees they charged. By the early 1980s, law school had become a choice destination for top college graduates. American Lawyer began gathering and publishing revenue and profit statistics for top-grossing firms, ratifying the J.D. as a ticket to the upper class.

The high-tech revolution, globalization and Wall Street’s dubious expansion have generated still more demand for sophisticated legal services. In 1985 the 50 top-grossing firms had a combined revenue of $3.4 billion. If their collective top line had increased at the rate of inflation, it would have been the equivalent of $6.9 billion in 2010, [notes Michael Trotter, a corporate lawyer and author of a forthcoming book called Declining Prospects]. Instead, the figure rose to $48.4 billion.

“Hourly rates just went up and up,” Trotter says. Fancy lawyers charged whatever the market would bear.

. . . .

[There is a] fundamental challenge facing the legal profession: At all levels, the industry suffers from excess labor.

The number of people with law licenses grew from 212,600 in 1950 to 1,225,000 in 2011 -- a sharp change from a ratio of one attorney for every 709 Americans to one for every 257. Forty- five thousand newly minted attorneys become available every year in a field with only 25,000 job openings. Law firms of all sizes laid off attorneys during the lean years of 2008 and 2009, and hiring has not fully rebounded.

. . . .

During the past year, unemployed young attorneys across the U.S. have banded together to sue their alma maters -- generally schools of modest repute -- for fraudulently exaggerating graduates’ job prospects. One such suit filed against New York Law School was dismissed in March by a judge who said aspiring attorneys should know the concept of caveat emptor.

Despite the disgruntlement of recent law school graduates, the decline of some white-shoe law firms has an upside. The number of people taking the Law School Admission Test has fallen by almost 25 percent in the past two years.

We have a lot of decrepit bridges in this country, factories that could use modernization, and clean-energy technologies that need inventing. It’s a moment for more engineers and entrepreneurs, not more lawyers.